Olivier Blanchard explains how the Great Moderation had created a sense of complacency among macro economists ho had started to beleive that non-linearities , ie small schocks that could cause large adverse effects, were a thing of the past. He then goes on to suggest how benchmark models such as the DSGE need to be adjust to provide warnings for when an economy is close to "dark corners" where the economy malfunctions badly .
The Bank for International Settlements exists not just to represent central
banks, but also to offer ideas and intellectual feedback. Unfortunately, too
many central bankers are seeking to marginalize the BIS in debates over
"unconventional" monetary policy.
Widening inequality in the world’s advanced and developing countries inflicts
two blows against democratic politics. Not only does it lead to greater
disenfranchisement of the middle and lower classes; it also fosters among the
elite a poisonous politics of sectarianism.
As the G-20 meeting of finance ministers starts in Cairns, Australia, the Legion
of Gloom is at it again, claiming that the system of global governance
structures ranging from the WTO and the G-20 to the major central banks is in
desperate need of repair. In fact, the global economic order has worked
remarkably well since 2008.
The fact that President Nicolás Maduro's administration has chosen to default
on 30 million Venezuelans, rather than on Wall Street, is not a sign of its
moral rectitude. It is a signal of its moral bankruptcy.